For many families in emerging markets, the remittances market is a valuable external source of funding that helps provide for basic living expenses like shelter, food, medicine, education and utility bill payments. The money sent home by foreign domestic workers tends to be a steady source of income for the families back home. Remittances aren’t affected by domestic economic performance and in a sense serve as a lifeline during challenging times. Besides stabilising household income, remittances are also used for savings and investments contributing to local businesses, community improvements and overall quality of life.

Despite its global importance, governments and institutions have only recently begun focusing on the resolving the problems faced in the remittance market. There are a number of structural challenges but likely the most important issues are high transaction costs and a reliance on banks. As you probably figured from the title, we have a single solution for both these challenges.

The challenges of the remittance market

Too much money is spent on the transaction itself, and too little money actually reaches the families back home. The most recent calculation made by The World Bank put the average cost of sending $200 at 7.09 percent in 2017. This would mean that in 2017, $32bn of the $440bn sent in total was wasted on the transaction itself.
When you’re doing a money transfer from bank account to bank account, most of that cost comes from inefficient banking processes. For money to travel between countries, it changes hands frequently between intermediary banks before it reaches the final destination. Every time money is transferred, or exchanged into different currencies, fees are added and less money
reaches the recipient family.

The other option for sending your money to family back home is through retail remittance transfer channels, like Western Union or MoneyGram. While these options could be faster or more accessible to people without bank accounts, it’s not necessarily a lot cheaper. High overhead costs and increasing regulatory burden make the retail remittance option even more
expensive at times, depending on the remittance corridor and currency pairing. Besides cost, the retail sector is becoming a less reliable option as banks are moving away from the industry in an attempt to de-risk their own operations.

The UN Sustainable Development Goals has set a target for 2030 to reducing remittance costs to less than 3% by 2030. In a bid to reach that goal, governments and banks are exploring ways to streamline the current system and in doing so lower the cost. But this completely overlooks the bigger issue: 2 billion citizens in the developing world do not have access to banks. This means that none of the technology innovation put in place by banks will reach the people that need it the most. And what good is a more streamlined banking process if you don’t have access to it at all?

That’s where Zephyr and Bitspark come in: reducing costs and removing reliance on banks.

Lowering costs with cryptocurrencies

We are redefining the way remittances work with a cryptocurrency enabled network that drastically lowers the cost of sending money across borders. To get rid of all the intermediary banks that send fiat currencies to each other and adding fees along the way, money sent abroad through the Bitspark network will travel as cryptocurrency. Transactions using cryptocurrencies are direct, which lowers cost, and much more efficient as they are completed
in mere seconds.

A critical piece in our strategy that allows us to achieve that is the fiat-pegged cryptocurrency – a feature enabled by the Bitshares Blockchain and DEX. On the BitShares exchange, we can create cryptocurrencies pegged to the value of another asset such as the US Dollar, Chinese Renminbi or even gold. With this feature, we can create pegged cryptos for specific remittance corridors to maximise efficiency for each of the world’s 180 fiat currencies.

Fiat-pegged cryptos enable us to keep the costs down for exotic currency pairings while maintaining speed and reliability.
And this new system is entirely accessible for the world’s 2 billion unbanked. All you need is a phone with an internet connection.

A remittance network that doesn’t need banks

To make sure our network, with all its crypto benefits, has global reach and includes the 2 billion unbanked citizens worldwide, we need to remove the reliance on banks altogether. We have done just that by setting up a system where all you need is a phone with an internet connection.
It’s essentially a cash in, cash out system where cryptocurrencies are just the connecting thread for transporting fiat currencies across borders. Remitters don’t need bank accounts or any understanding of cryptocurrencies for that matter. All they will see, is that less money is spent on transactions and more is received by their families.

Our system bypasses banks altogether and is built in a way that complements the existing global network of Money Transfer Operators (MTOs). MTOs already have the networks, and everyday remitters already use their services for sending fiat cash. Our system simply plugs into this process and makes it better. Instead of using bank accounts, MTOs buy and sell fiat currencies which increases or decreases their digital fiat-pegged- crypto balance.
This works on both ends of the transaction. Our mobile app Sendy connects remitters to locate MTOs near them, top up their balances and transfer money to their relatives abroad.

The most important thing to take from this, is that all the benefits of crypto-enabled transactions are delivered through an easy to understand and familiar process. The only requirement for users is that they have a phone and internet connection. This setup is tailored to the reality of
remittances in the developing world, as you can see with our ongoing Tajikistan expansion.

Tajikistan is a country where a diaspora of 1 million remit their earnings back home, 85-90% of the population is unbanked, but has a high mobile penetration rate at 100%. It’s the perfect target market for Bitspark and proves there is a massive opportunity for us to improve financial
access and inclusion worldwide.

Fuelling global network growth with Zephyr

To bootstrap the growth of our network, we have designed the Zephyr token to act as an incentive and reward token. When an MTO signs up to our network, they immediately benefit from all the cryptocurrencies benefits outline above. But there’s more. They are also rewarded free Zephyr as a welcome gift, just for joining the network. For each beneficial action undertaken, such as sending transactions, they are given even more Zephyr. Users simply get paid to join the network and to keep using the network. And since Zephyr is worth real money,

who would turn that down?

To maintain the long-term value and utility of Zephyr, both for everyday users and token traders such as yourself, we have designed a buy back mechanism. In what is a rather unique element of our system, Bitspark commits 25% of fees earned on transactions to buy back Zephyr from the BitShares DEX. Doing so, we can guarantee that Zephyr will continue to increase in value
and circulation as the network grows, more people actively use the service, and more people like you trade ZEPH on the exchange. It’s effectively a positive feedback loop where Zephyr is caught between network growth, usage, circulation and value, where one positively affects the other.

With this mechanism, we see Zephyr as fuelling the growth of a redefined remittance network that increases financial inclusion at less cost. We’re working at the scale necessary to make a real impact and improve economic opportunities for people around the world. Zephyr is supported by a community that believes in that message and you’re invited to join the revolution.

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